BILL NUMBER:S3112

TITLE OF BILL:
An act
to amend the tax law, in relation to a brownfield redevelopment tax
credit

PURPOSE:
This bill would cap the tax credits available for the redevelopment of
Brownfield sites whose request for participation in the Brownfield
cleanup program (BCP) was denied by the Department of Environmental
Conservation (DEC), but the denial was overturned in Court.

SUMMARY OF PROVISIONS:
Section 1 would amend subparagraph (A) of paragraph
3-a of subdivision
(a) of section 21 of the tax law to provide that any site which has
been denied access into the Brownfield Cleanup program, but the
denial was overturned in court, will be eligible for the tax credits
as capped by Chapter 390 of the laws of 2008.

EXISTING LAW:
The current statute awards tax credits based on the date that DEC
grants eligibility, leaving some ambiguity as to the relevant date
for court ordered access.

              

JUSTIFICATION:
Under this proposal, the State's exposure in cases being litigated due
to the Department's denial of an application to the Brownfield
Cleanup program (BCP) would be limited to the cap contained in
Chapter 390 of the Laws of 2008 -- $45 million for a manufacturing
site and $35 million for others. To receive the redevelopment credits
the property must have a Certificate of completion (COC) though
credits may be claimed over a period of 10 years following issuance
of the COC.

Chapter 390 of the Laws of 2008 capped the amount of the tangible
property tax credit (redevelopment credits) available under the
Brownfield Cleanup Program (BCP). This was an important step in
reforming the BCP, in that it placed a limit on the lucrative
refundable tax credits for individual projects. There is now a
maximum brownfield redevelopment benefit of $45 million for
manufacturing projects and $35 million for all others. The effective
date of Chapter 390 provided that the revised system of tax credits
would apply to sites acquired on or after April 1, 2005. This
proposal is an attempt to address the State's fiscal vulnerability
represented by a number of court cases challenging the eligibility
requirements of the BCP. To the extent that the recently enacted caps
on brownfield tax credits will help reduce the dramatic outlays of
cash rewards going forward, the state is currently in litigation over
several very costly projects that were denied access to the program
and, thus, to the immense pre-2008 reform financial benefits. Since
the inception of the Brownfield Cleanup Program in 2003, DEC has
interpreted the statute and used its discretion in such a way as to
exclude sites where the degree of contamination or other factors did
not justify the investment of significant state resources.


FISCAL IMPLICATIONS:
While it is impossible to know how all of the litigation will be
ultimately decided, if, hypothetically, all cases were resolved
against the State, the cost to New York taxpayers will likely exceed
one billion dollars. In light of the legislative action taken last
year, it is reasonable to statutorily limit the amount of the court
awards allowable to conform with the 2008 reform bill that caps the
tax credits.

LOCAL FISCAL IMPLICATIONS:
None noted.

EFFECTIVE DATE:
Immediately and shall be deemed to have been in full force and effect
on and after July 21, 2008.